India should dream of double-digit growth: Rangarajan (Interview)

By Rajeev Ranjan Roy New Delhi, Aug 13 (IANS) Economic reforms in India now need a major push forward to log a higher and inclusive growth of over 10 percent in a bid to end stark poverty and achieve overall development, former central bank governor C. Rangarajan said Wednesday. “We need to take economic reforms forward. This is necessary for achieving a higher growth rate and also to end stark poverty and overall development of the country,” Rangarajan, now nominated to the Rajya Sabha, told IANS in an interview.

“I firmly believe the momentum of implementing economic reforms programme and liberalisation has to be maintained. I will push it as a Rajya Sabha member. I’ll also try to push economic reforms in the national interest,” he added.

Rangarajan said he was optimistic of India achieving a double digit growth in the near future, even though his forecast for the current fiscal was much lower than the government’s own estimate.

“If we cross the 9 percent growth mark next fiscal then I am certain we can even dream of 10 percent growth or more in the subsequent years. In the medium term, I remain quite optimistic on the performance of the Indian economy.

The 76-year-old economist-banker said there was also a need to create more job opportunities, especially because India was a country of young people, and also to fight the menace of poverty.

“Poverty eradication, employment generation and economic reforms are some of the issues we need to focus on. These are the issues I will try to raise in the august house.”

Referring to some specific issues of liberalisation, Rangarajan said the opening up of the Indian economy to more foreign direct investment was “desirable” and added that efforts should be made to convince people on its merits.

Accordingly, he said increasing the cap on foreign investment in sectors like insurance, as also a further liberalisation of India’s financial sector as a whole, was the need of the hour.

Earlier in the day, before stepping down as the chairman of Prime Minister’s Economic Advisory Council, he projected a slight dip in India’s growth at 7.7 percent for the current fiscal.

“The downside risk to our growth expectations in 2008-09 is primarily from a further deterioration in global conditions with attendant impact on India - be it in the sphere of oil prices or capital markets,” the panel’s report said.

On the issue prices, Rangarajan did not rule out the possibility of inflation rate scaling a new high from the current level of 12.01 percent for the week ended July 26.

“Inflation may touch the 13 percent-mark,” he said, even as the panel projected inflationary trends to moderate to 8-9 percent by March 2009.

“The trends of moderation in inflation should begin in December,” Rangarajan, now nominated to the Rajya Sabha, said, adding: “Monetary tightening is needed to contain inflation.”